secrets of the millionaire traders vol ii

If traders in general believe the market is headed higher and the rally fails, it's usually a good sell signal.. When prices break through a trendline and trade outside of the trendline

"Tricks, tips and rules from interviews with Millionaire Traders - Volume II…"

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"…a revolutionary approach to trading."

A very small percentage of all traders are

successful.

Yet, some traders accumulate more than

1 million dollars in trading profits.

What do the successful traders do differently?

Searching for the answer to this question is what prompted

interviews with several millionaire traders.

Some of the rules that millionaires use are familiar to all traders Others may be contrary to the common beliefs.

This is volume II compiled from these interviews and follows on from the hugely influential first 25 rules, secrets and tips

However, some of the most powerful rules have been held back for volume II…

INTRODUCTION

RULE #1

-Use stop orders cautiously.

Stop orders are easy discipline They may help you

cut losses short automatically

An important factor is to place your stop when you

place your order If you don't, you're tempted to

give the market "a few more pennies", only adding

to your potential loss

But remember, you should use stop loss orders

with great discretion because stops that are placed

too tight can put you out of the market with a loss

very quickly

You can become "whipsawed" by poor placement

of stops

When trading e-mini contracts, trading becomes

very thin in the last few days before the contract

expires You may not find it so easy to exit at a

favorable price, particularly if you have several

contracts

When trading commodities, the price of a

commodity during the delivery month may be

more volatile The beginning trader should move

into later month contracts to avoid this added

risk

The profit potential in making and taking

delivery is one that should only be handled by the

experienced cash market trader

RULE #2

-Get out before contract maturity.

RULE #3

-Ignore normal seasonal trends.

Although the price of corn historically goes down

at harvest, one of the millionaire traders doesn't let

that influence his trading

"Too many people try to trade seasonal trends, so

look for a place to do just the opposite,"

he suggests

RULE #4

-Trade divergence from the normal.

This rule is one of the big keys some successful

traders use regularly They trade divergence from

the normal or from what is expected If traders in

general believe the market is headed higher and

the rally fails, it's usually a good sell signal

Wait for market traders in general to lean one way,

then time a trade in the opposite direction

RULE #5

-Avoid picking tops and bottoms.

When you go against the trend, believing that the

market has either topped or bottomed, you are

making yourself very vulnerable

This can be a very costly lesson to learn, say the

millionaires They prefer to let the market price

action prove that a top or bottom has been formed

RULE #6

-Buy bul ish news, sel the fact.

If market rumors are bullish, then you should buy

on the news

But when the news reports turn into a reality, then

it is time to "sell the fact"

RULE #7

-Bul markets die of overweight.

There's an old stock market rule that says that bull

markets can fall flat on their own weight when

prices get top heavy

Be especially sensitive to bearish news if you're

long

RULE #8

-Look for good odds.

Look for opportunities where the loss potential is

small in relation to the profit potential For

example, if a market is trading near its recent

historic lows, it could mean a long position has

great upside potential in relation to possible loss

Watching the trading range of a market over a

longer time period helps you have the perspective

to determine the odds

Market fundamentals can also be helpful in finding

the "high odds" situation

RULE #9

-Always take windfal profits.

Sometimes you take a position and within 48 hours

you have more profit than you ever expected

Rather than watching the market a few days to

figure out why the profit came so fast, the

millionaires say "Take quick profits and run!"

RULE #10

-Learn to sel short.

Most beginners tend to be bulls, which means they

buy markets that they think will go higher

Since markets often fall faster than they rise, you

can frequently earn quicker profits by selling short

Learn to trade from the short side of the market

RULE #11

-Act promptly.

procrastinate The rule of thumb the millionaires

use is to act promptly This doesn’t mean you

should be impulsive, but if your judgement says

you should liquidate a position, do it immediately

RULE #12

-Don't reverse your position.

When your position is a loser and you decide to

get out, don't make a 180-degree turn For

example, if you have been long and decide the

market is working against you, get out and stand

aside for a while before going short

If you reverse a position you can be whipsawed

-losing as the market goes down, then -losing more

as the market moves up

RULE #13

-Don't be a nickel and dimer.

If you want to be long, don't put a price limit order

in a couple of pennies below the market, hoping to

find a bargain

People who try to squeeze an extra penny out of

the market frequently find the market moves

almost to their target, then slips away

In hoping for an extra penny, they may give up

much more

When you think it's time to do something, make

your move

You can identify major price trends by using line

charts, one of the fundamental tools of the

successful trader The mistake that many traders

make is to buy or be long while the markets are

still in a basic downtrend or selling short when

they are in up trends

Charting markets yourself or subscribing to a chart

service can help avoid costly errors of selling into

obvious up trends and buying downtrends

RULE #15

-Watch for key breakouts through

trend l nes.

Some successful traders trade almost exclusively

on this rule They make bar charts When prices

break through a trendline and trade outside of the

trendline for two or three days, it's usually a good

trading signal This violation of a downtrend line

is a buy signal; the reverse is also true for a sell

signal when an uptrend line is penetrated The

trendlines then give you some guidelines for

determining stops

RULE #14

-Know the price trend.

his completes Part 1 of

RULE #16

-Watch for 50% retracements of a

major move.

You frequently hear the market is in a "technical

reaction", which means that after a major move in

either direction the market has a tendency to

retrace up to 50% of that move

The millionaires would look for another chance to

buy when the price drops by 50%

RULE #17

-Use the half way rule when

picking buy-sel spots.

This means finding out over what range a market

has been trading, then buying in the lower half of

that range or selling in the upper half

This rule is particularly useful in a trading market

RULE #18

-Watch the magnitude of market change.

RULE #19

-Congestion areas can mean support

or resistance.

When a market moves lower, but by a smaller

amount each day, it may be a signal for an uptrend

When the market moves up each day, but in

smaller amounts, it's an early signal that a

downtrend may be just around the corner

These areas act as barriers that slow down price

action When you hear a market commentator say

there is technical support at a certain price level,

chances are good that he is looking at a line chart

which shows an old congestion area where trading

took place over a narrow range for several weeks

Major price moves may develop when the market

breaks out of a trading area Usually the longer the

market has been chopping around in the trading

area, the further the price moves once it breaks

out

RULE #20

-Major moves frequently cl max

with a key reversal.

A key reversal of an uptrend is usually indicated

when prices make new highs on high volume, but

then close lower than the previous day's close

A key reversal of a downtrend is a move into lows,

then a strong recovery during the day with a close

higher than the previous day's close

A key reversal may come in the form of a two-day

reversal when on the first day the move is into new

high ground and a close on strength

On the second day the market may open near the

high close of the previous day, then close sharply

lower

An island reversal is formed when prices gap into

new highs on one day, then gap lower the next

day

RULE #21

-Watch for head and shoulder

formations.

When you observe a chart pattern that resembles a

"head and shoulder", it is usually a sign the market

is topping out

Head and shoulder patterns are not obvious until

the second "shoulder" is formed by a rally or

sideways pattern

RULE #22

-Watch for "M" tops and "W"

bottoms.

When the market action on a price chart indicates

a large "M", the price signal is to sell

When a "W" is formed, it signals a move higher

RULE #23

-Trade triple tops and bottoms.

After a market has hit a peak the second or third

time, it is a bearish signal The reverse is true at

the bottom

The millionaires watch these signals and use them

as part of their overall trading strategy

RULE #24

-Watch volume for price clues.

When volume and price go up together, it's a

buying signal When volume increases and prices

go down, it's a sell signal

But when volume goes down, regardless of price

direction, it's a signal to stand aside, or expect a

market reversal

RULE #25

-Open interest may be a tip of

If open interest is increasing as prices rise, it's a

buying signal, especially if volume increases at the

same time

The reverse is also true If open interest increases

with lower prices and on good volume, it is a

selling signal

Discover The Way To Trade:

Futures - http://www.the-way-to-trade.com/futures.php

E-mini - http://www.the-way-to-trade.com/e-mini.php

Discipline - http://www.the-way-to-trade.com/discipline.php

Online - http://www.the-way-to-trade.com/online.php

Stocks - http://www.the-way-to-trade.com/stocks.php

Commodities - http://www.the-way-to-trade.com/commodities.php

Beginners - http://www.the-way-to-trade.com/beginners.php

Options - http://www.the-way-to-trade.com/options.php

Swing Trading - http://www.the-way-to-trade.com/swing-trading.php

Day Trading - http://www.the-way-to-trade.com/day-trading.php

Trading Resources

"Secrets of Millionaire Traders Volume II"

I hope you have enjoyed reading volume II just as much

as the first set of 25 secrets of millionaire traders.

If you haven't already done so, please take a moment to

the services they offer.

Best regards and wishing you continued success with

your trading.

Paul Handforth

www.The-Way-To-Trade.com

Avalanche Direct Limited